Yes, guidelines still require that borrowers provide 1 month’s bank account statement for all loans, regardless of if we use the funds in the account to qualify the loan.

Depends on the occupancy. On Owner-occupied, proceeds from a cash-out refinance may only be used towards reserves if 1) LTV is 70% or less; and 2) FICO is 720 or greater. On investment properties, cashout proceeds may be used towards the reserve requirement.

Yes, given acceptable motivation. Borrowers to provide a satisfactory motivation letter confirming their intent to move into subject property as primary residence. Borrowers to also state what they intend to do with the vacating residence (sell, rent, etc.). If they will be converting their vacating property to a rental, and are using rental income to qualify the loan, borrowers to provide fully executed proposed lease for incoming tenants, including copies of cancelled first month’s rent and security deposit checks, and proof of deposit into borrowers’ personal bank account. If we do not require rental income to offset the housing payment, then just the letter is acceptable. Entire current housing debt will be included in DTI.

Property must be rated with a minimum C3 rating. C4 will be considered on a case-by-case basis.

Yes, we follow FNMA guidelines in regard to leasehold properties.

Lease and Lender Requirements

The term of the leasehold estate must run for at least five years beyond the maturity date of the loan unless fee simple title will vest at an earlier date in the borrower.

The lease must provide that the leasehold can be assigned, transferred, mortgaged, and sublet an unlimited number of times either without restriction or on payment of a reasonable fee and delivery of reasonable documentation to the lessor. The lessor may not require a credit review or impose other qualifying criteria on any assignee, transferee, mortgagee, or sublessee.

The lease must provide for the borrower to retain voting rights in any homeowners’ association.

The lease must provide that in addition to the obligation to pay lease rents, the borrower will pay taxes, insurance, and homeowners’ association dues (if applicable), related to the land in addition to those he or she is paying on the improvements.

The lease must be valid, in good standing, and in full force and effect in all respects.

The lease must not include any default provisions that could give rise to forfeiture or termination of the lease, except for nonpayment of the lease rents.

The lease must include provisions to protect the mortgagee’s interests in the event of a property condemnation.

The lease must provide lenders with:

• the right to receive a minimum of 30 days’ notice of any default by the borrower, and
• the option to either cure the default or take over the borrower’s rights under the lease.

We follow FNMA’s guidance when it comes to properties that have a business-use in addition to their residential use, such as a property with space set aside for including but not limited to, a day care facility, a beauty or barber shop, or a doctor’s office. The following special eligibility criteria must be met:

• The property must be a one-unit dwelling that the borrower occupies as a principal residence.
• The borrower must be both the owner and the operator of the business.
• The property must be primarily residential in nature (over 50% residential use), AND
• The dwelling may not be modified in a manner that has an adverse impact on its marketability as a residential property.

The appraisals for such properties must include All of the following requirements:

• provide a detailed description of the mixed-use characteristics of the subject property;
• indicate that the mixed use of the property is a legal, permissible use of the property under the local zoning requirements;
• report any adverse impact on marketability and market resistance to the commercial use of the property; AND 
• report the market value of the property based on the residential characteristics, rather than of the business use or any special business-use modifications that were made.

No. EFU zones are preserved and protected lands for continued and future commercial agricultural production and related uses. As such, even if the purchaser or current owners do not use the property for commercial use/production, the property would be ineligible for CDL.

It depends. If a property is zoned for agricultural use, we must ensure that the property is residential in nature, its residential use is a permissible use under the zoning classification, and its use does not primarily involve commercial activities such as farming or ranching. We follow FNMA / Freddie Mac regarding this topic. For more information, please click on the following link: https://sf.freddiemac.com/faqs/rural-properties-faq

That would depend on the type of outbuilding. We follow FNMA’s guidance on this topic:

No.

Yes, if the subject unit is NOT and does not have the option to participate in the hotel program. The project will be considered as ‘non-Warrantable’, whereas LTV restrictions and pricing adjustments will apply.

No, Investment coops are not permitted. Only investment Condo units are permitted.

Projects with any sort of re-sale restrictions present a severely negative impact on the marketability of the unit in the event borrower defaults and this becomes an REO. It is important to identify what the restrictions are in order to determine project warrantability and eligibility:

• If the only restriction is “Right of First Refusal”, this is okay, and the project can still be eligible as Warrantable.
• For projects with age restrictions, such as 55-and-older communities, we will allow financing to these projects if:
  • Borrower meets the age requirements, and;
  • The project must not have any rehabilitation, medical treatment, or elder-care facilities (for example, nursing homes).
  • The project will only be considered eligible as a non-Warrantable. If both the above conditions are not met, the loan will be ineligible under all loan programs.
• For projects with income restrictions, such as low-to-moderate income (LMI), we will allow financing to these projects if:
  • the subject unit is NOT one of the LMI or income-restricted units.
  • The project will only be considered eligible as a non-Warrantable. If the above condition is not met, the loan will be ineligible under all loan programs.

For all other re-sale or owner-related restrictions not identified above, the loan will be deemed ineligible under all loan programs.

For assets to close, yes. If Business assets are to be used, the business’s Accountant/CPA/Tax Preparer must verify that business will not be adversely impacted by Borrower withdrawals.

This is allowed on a case-by-case basis. If tradelines are being paid off or paid down to improve FICO scores, must provide proof of payment and source of funds used.

If the loan program is for Lite Doc investment, yes. If the loan program is DSCR, it will depend on the state in which the property is located.

Yes, 100% gift funds are allowed for down payments and closing costs. You can also accept a gift of equity from your relative in the purchase.

The accountant does not need to make a representation that the P&L is audited. 

We allow up to 10k of unsourced deposits over a one-month period combined.

It depends on the loan program. For Owner-Occupied Lite Doc and Bank Statement programs, see below:

The only restriction is that First Time Homebuyers require a Minimum 660 FICO. You can be a FTHB and purchase an investment property and use the rental income to qualify unlike Fannie Mae and Freddie Mac – and we also accept gifts towards down payment and closing costs.

We require at least 3 tradelines reported for a minimum 12-month period. Borrower may use alternative tradelines to meet the minimum requirements.

We do not apply an expense factor of the P&L, we qualify using the net income. But, if the client owns less than 100% of the business we will use the percentage of ownership by the net income.

Yes. P&L or VOE.

The letter can come from a CPA, an accountant, an enrolled agent, or a Tax Preparer.  Letter must include length of relationship with borrower, Borrower’s position/title, Ownership percentage of company, Business inception date, and Statement on good standing of the borrower’s business. Letter must be signed on the accounting firm’s letterhead and cannot contain any exculpatory language that may compromise the integrity of the information provided.

No. We are only looking for 1 month (the most recent month) bank statement to verify all funds.

Yes. However, the property must be held in an Inter Vivos (Living) Revocable Trust. Irrevocable trusts are not permitted. We follow FNMA’s guidance regarding this topic. At least one of the Settlors/Trustors who established the trust must be on the Loan/Note and used to qualify. Trustee(s) may also credit qualify for the loan, so long as they have the power to mortgage the security property for the purpose of securing a loan. All individual borrower(s) must sign the Note itself. The Title/Mortgage will be in the name of the Trust.

All trust formation documents need to be emailed to [email protected] for review. A Change of Circumstance (CoC) is required adding the Trust Attorney Review fee of $250.

Yes. However, only Investment properties can be held under an entity name (Corp/Inc/LLC). The loan will be opened with the entity as the Borrower and the individual owning the entity as the Guarantor. All individuals with 25% or more ownership in the entity must guarantee the loan and provide an application. The Certification of Beneficial Owners of Legal Entities form must be signed and completed prior to closing. Owner-occupied and second home properties cannot be done in an LLC.

It will depend on the program type, loan purpose, FICO, and LTV. Generally, the minimum loan amount is $100,000 and the maximum loan amount is $3,000,000. Loan amounts must be in increments of $50.